IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

Safety Today, Inc., :

 

Plaintiff, :

 

v. : Case No. 2:12-cv-510 

 

Susan Roy, et al., : JUDGE MICHAEL H. WATSON

 Magistrate Judge Kemp

Defendants. :

Safety Today, Inc., :

 

Plaintiff, :

 

v. : Case No. 2:12-cv-929 

 

William C. Rankin, : JUDGE JAMES L. GRAHAM

 Magistrate Judge Kemp

Defendant. :

 

OPINION AND ORDER

This is a case in which defendants Susan Roy and Joanne

Brady are alleged to have taken confidential information from

plaintiff Safety Today, Inc. (“Safety Today”), to benefit their

new employer, defendant Safeware, Inc. (“Safeware”). Safety

Today claims that Ms. Roy, Ms. Brady, and Safeware (collectively

“defendants”) violated the Ohio Trade Secrets Act, O.R.C.

§1333.61, converted its property, and committed tortious

interference with prospective business relations and

opportunities. Safety Today also claims that Ms. Roy and Ms.

Brady breached the duties of good faith and loyalty.

Currently before the Court are a motion to consolidate cases

(Doc. #71) and a motion for leave to file counterclaims (Doc.

#82) filed by defendants, a motion for a protective order (Doc.

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#78) filed by Safeware, and a motion to compel (Doc. #88) filed

by Safety Today. The Court will consider these motions in turn.

I. Motion to Consolidate Cases

Defendants move to consolidate this case with Safety Today,

Inc. v. William Rankin, No. 2:12-cv-929, on the grounds that

“[t]he cases are nearly identical and share multiple common

questions of law and fact.” (Doc. #71). Safety Today opposed

the motion, primarily due to its view that this case, which was

filed first, is further along and could significantly delay

resolution of its claims. (Doc. #80). Safety Today also argues

that there are disparate factual issues which predominate over

the common issues of law. Id. at 2. In response, defendants

argue that the distinguishing issues of fact and different

procedural stages weigh in favor of consolidation. (Doc. #85).

Consolidation of cases is provided for in Fed. R. Civ. P.

42(a), which states, in pertinent part, that the Court

may order consolidation of actions involving “a common

question of law or fact...." The underlying purpose of this

long-standing rule is to promote economy in the administration of

justice. See Feldman v. Hanley, 49 F.R.D. 48, 50 (S.D.N.Y.

1969). Any savings of litigant and judicial resources achieved

by consolidation must be balanced against any prejudice to the

parties, including potential confusion of the issues, which might

result from consolidation. See Arroyo v. Chardon, 90 F.R.D. 603,

605 (D.P.R. 1981). It is not a prerequisite to consolidation

that there be a complete identity of legal and factual issues

posed in the cases which are the subject of the request. See

Thayer v. Shearson, Loeb, Rhoades, Inc., 99 F.R.D. 522, 523

(W.D.N.Y. 1983). Rather, as long as there are some common

questions of either law or fact, the Court has the

flexibility under Fed. R. Civ. P. 42 to allow cases to proceed

jointly with respect to such matters in which joint proceedings

would not be unduly prejudicial and would be an effective

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utilization of judicial resources. See Brewer v. Republic Steel

Corp., 64 F.R.D. 591, 594 (N.D. Ohio 1974); see also Cantrell v.

GAF Corp., 999 F.2d 1007, 1010-11 (6th Cir. 1993).

The Court’s broad discretion to consolidate cases involving

common questions of law and fact is not limited to ordering

consolidation for all purposes. Fed. R. Civ. P. 42(a) “also

contemplates consolidation for purposes of particular segments of

the litigation, such as pretrial proceedings.” Magnavox Co. v.

APF Electronics, Inc., 496 F.Supp. 29, 32 (N.D. Ill. 1980). By

ordering only a partial consolidation, the Court reserves the

ability to assess the status of the cases following the

completion of consolidated proceedings and then to determine if a

trial on all issues, or only some, would be a more efficient and

more appropriate use of the Court’s and the parties’ resources.

Here, the cases involve common questions of law and fact. 

More specifically, both cases involve allegations that former

Safety Today employees misappropriated Safety Today’s

confidential information to benefit a new employer, and both

cases involve claims that defendants violated the Ohio Trade

Secrets Act, O.R.C. §1333.61, converted Safety Today property,

committed tortious interference with prospective business

relations and opportunities, and breached the duties of good

faith and loyalty. It is clear that the cases are related under

S.D. Ohio Local Rule 3.1(b), in that they “[c]all for a

determination of the same or substantially identical questions of

law or fact” and “[w]ould entail a substantial duplication of

effort and expense by the Court and the parties if heard by

different judges.” Further, counsel for defendants is the same

in both cases, and it appears that there will be a substantial

amount of overlap in discovery and motions practice in each case.

Based on the foregoing, it makes sense to consolidate the

cases for discovery purposes as well as for the purposes of

motions practice in order to avoid duplicative discovery and the

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filing of overlapping motions which, in order to be properly

considered, should reflect developments in both cases. Whether a

single trial might also be the most efficient and least

prejudicial way to resolve these cases can be determined once

more discovery is completed and the factual and legal

similarities or differences in trial evidence can be assessed

more completely. Therefore, the Court will grant the motion for

consolidation as it relates to all pretrial proceedings. The

Clerk of Courts will be directed to file a copy of this order in

Safety Today, Inc. v. William Rankin, No. 2:12-cv-929 and

reassign that action to the Honorable Michael H. Watson, with the

undersigned continuing to serve as the Magistrate Judge in both

cases.

II. Motion for Leave to File Counterclaims

Defendants have filed a motion for leave to file

counterclaims, rather than a motion for leave to amend their

answer to add the counterclaims. (Doc. #82). A counterclaim is

not a stand-alone pleading; rather, “a counterclaim is to be

included in a pleading.” See Health v. Audatex North Am., Inc.,

No. 11-2779, 2012 WL 177413, at *3 (E.D. Pa. Jan. 23, 2012)

(citing Fed. R. Civ. P. 13(a)&(b) and explaining instances where

“[a] pleading must state as a counterclaim” and where “[a]

pleading may state as a counterclaim”). Consequently, defendants

should have filed a motion for leave to amend their answer to

include the counterclaims, as opposed to a motion for leave to

file counterclaims. For purposes of efficiency, however, the

Court will not require defendants to re-file the motion. 

Instead, the Court will construe defendants’ motion to be filed

properly as a motion for leave to amend the answer to add the

counterclaims. For the following reasons, the Court will grant

the motion. 

Defendants seek to add counterclaims for tortious

interference with a contract and/or prospective business

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relations and defamation and/or defamation per se. (Doc. #82,

Ex. 2). Safety Today has not filed any opposition to the motion. 

The basis for defendants’ proposed counterclaims is a letter that

defendants allege that Safety Today sent to Safeware customers

after the preliminary injunction hearing. Id. at 3. The letter

states, in pertinent part, that “the Federal Court acknowledged

that Sue Roy and Joanne Brady not only took Safety Today’s

confidential information and trade secrets but used such

information to solicit the business of Safety Today customers.” 

Id. According to defendants, the letter “completely

misrepresented this Court’s Decision – which never concluded that

any of the information at issue was either confidential or a

trade secret – to Safeware’s customers . . . , whom Ms. Roy

currently services.” Id. Defendants allege that the letter had

nothing to do with explaining the case to its customers; rather,

they claim that Safety Today “misrepresented the Court’s

[d]ecision as part of a marketing plan.” Id. at 4.

This Court must first determine whether there is good cause

for leave to amend the answer under Fed. R. Civ. P. 16(b) because

defendants seek to amend their answer to add the counterclaims

after the date established for amending pleadings in the Court’s

preliminary pretrial order. (Doc. #26). The touchstone of the

good cause inquiry under Fed. R. Civ. P. 16(b) is whether the

moving party acted diligently in attempting to meet the deadline

for amending pleadings. See Deghand v. Wal-Mart Stores, 904 F.

Supp. 1218, 1221 (D. Kan. 1995)(“The party seeking an extension

must show that despite due diligence it could not have reasonably

met the scheduled deadlines.”) Further, although the primary

focus of the inquiry is upon the moving party’s diligence,

prejudice to the other side is a factor to be considered. See

Inge v. Rock Fin. Corp., 281 F.3d 613, 625-26 (6th Cir. 2002). 

Here, the letter giving rise to the proposed counterclaims

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is dated October 12, 2012, after the deadline established for

amending pleadings. The record reflects that defendants filed

the motion within a reasonable time after learning of the

existence of the letter. Further, Safety Today has not opposed

the motion and, given the procedural posture of the case, it will

not suffer significant prejudice if amendment is allowed. 

Consequently, the Court finds that good cause for leave to amend. 

Fed. R. Civ. P. 15(a)(2) states that when a party is

required to seek leave of court in order to file an amended

pleading, “[t]he court should freely give leave when justice so

requires.” The Court of Appeals has spoken extensively on this

standard, relying upon the decisions of the Supreme Court in

Foman v. Davis, 371 U.S. 178 (1962) and Zenith Radio Corp. v.

Hazeltine Research, Inc., 401 U.S. 321 (1971), decisions which

give substantial meaning to the "when justice so requires." In

Foman, the Supreme Court indicated that the rule is to be

interpreted liberally, and that in the absence of undue delay,

bad faith, or dilatory motive on the part of the party proposing

an amendment, leave should be granted. Foman, 371 U.S. at 182. 

In Zenith Radio Corp., the Court indicated that mere delay, of

itself, is not a reason to deny leave to amend, but delay coupled

with demonstrable prejudice either to the interests of the

opposing party or of the Court can justify such denial. Zenith

Radio Corp., 401 U.S. at 331.

In this case, as noted above, Safety Today has not opposed

defendants’ motion, and it will not be significantly prejudiced

if defendants are permitted to amend their answer. That is,

given the current posture of this case, the Court is not

persuaded that Safety Today will incur significant costs

associated with discovery or delay as a result of the proposed

counterclaims. Consequently, defendants’ motion for leave will

be granted, and defendants are permitted to file an amended

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answer consistent with this Court’s order.

III. Discovery Motions

Safeware has filed a “motion for a protective for a

protective order to forbid plaintiff’s request for entry on land

to inspect and image” under Fed. R. Civ. P. 26(c). (Doc. #78). 

In the motion, Safeware opposes Safety Today’s request to inspect

and image the following items:

1. All computers, hard drives, servers, electronic

storage devices, and media, whether hand-held,

laptop, or desktop, smart phones, external hard

drives, Zip drives, floppy disks, DVDs, USB

devices, or other drives or electronic media

storage devices in your possession, custody, or

control upon which any of Safety Today’s

information currently resides and/or may have

resided in the past;

2. The hard drives of any computers within Safeware’s

possession, custody, or control used by any of Ed

Simmons, Ed Arthur, Susan Roy, Sean Roth, Beth

Sandberg, and Jodi Wright from April 1, 2012 to the

present;

3. The hard drives of any mail servers and file

servers within Safeware’s possession, custody, or

control that have been in use at any time between

April 1, 2012 and present.

Id. at 2 (quoting Pl.’s First Request to Def. Safeware, Inc. To

Permit Entry Onto Land for Inspection and Other Purposes, Ex. A). 

Safeware requests a protective order forbidding defendants’

request for three reasons:

First, it has no basis in fact. Second, the oppressive

and unduly burdensome request is aimed solely to burden

and annoy its competitor. Third, it fails all three Rule

26(b)(2)(c) prohibitions because (i) it is unreasonably

cumulative, (ii) there is no factual support for it

despite ample opportunity for discovery, and (iii) the

burden and expense outweigh the likely benefit.

Id. at 5. According to Safeware, its “counsel assured Plaintiff

that everything Defendants Roy and Brady took with them has been

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sequestered, and that it would destroy any remaining information

in Safeware’s possession.” Consequently, Safeware maintains that

it is entitled to a protective order and Safety Today’s discovery

request should be denied. Id. at 8.

In response, Safety Today filed a memorandum in opposition

to the motion for a protective order and a cross-motion to compel

Safeware “to permit entry onto land for inspection and other

purposes.” (Doc. #87). Safety Today argues that it is “not

obligated to provide ‘evidence’ of Safeware’s use of [its]

information prior to being permitted to conduct discovery.” Id.

at 4. According to Safety Today, “it is through the [r]equest

and discovery process itself that Safety Today seeks to learn the

extent to which Safeware is in possession of and/or is using

Safety Today’s information.” Id. Safety Today maintains that

its request is neither oppressive nor unduly burdensome. It

further explains that it “does not seek to disrupt Safeware’s

business but instead seeks only to image the [d]evices, which

would permit Safeware to continue to operate its business as

usual.” Id.

Safeware filed a reply brief in support of its motion for a

protective order. (Doc. #97). In its reply, Safeware argues that

“a bare allegation that Safeware is using Plaintiff’s

information– which has been repeatedly contradicted through

discovery– cannot justify Plaintiff’s requests.” Id. at 1.

Further, Safeware maintains that Safety Today’s request is broad

enough that, if granted, “would provide unrestricted access for

[Safety Today] to inspect and copy everything from its direct

competitor.” Id. Thus, Safeware urges the Court to grant its

motion for a protective order.

 This Court has substantial discretion to issue protective

orders pursuant to Fed. R. Civ. P. 26(c), which states that,

“[t]he court may, for good cause, issue an order to protect a

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party or person from annoyance, embarrassment, oppression, or

undue burden or expense. . . .” The incorporation of the concept

of “good cause” implies that a flexible approach may be taken,

depending on the nature of the interests sought to be protected

and the interests that the protective order would infringe. See

Hines v. Wilkinson, 163 F.R.D. 262, 266 (S.D. Ohio 1995). The

burden of establishing good cause for a protective order rests

with the party seeking the protection. See Nix v. Sword, 11 Fed.

Appx. 498, 500 (6th Cir. 2001). 

In this case, the Court finds that good cause exists to

compel the discovery requested under Fed. R. Civ. P. 37 and issue

a protective order under Fed. R. Civ. P. 26 limiting the

disclosure of information obtained to “attorneys’ eyes only.” 

The record reflects that Safety Today and Safeware are business

competitors, and Safeware has suggested that the requested

discovery could result in Safety Today’s obtaining information

which may affect its competitive position in the marketplace. 

(Doc. #97 at 1). A protective order which designates the

information obtained as “attorneys’ eyes only” constitutes a

practical and cost-effective way to protect Safeware’s interest

in sensitive information from Safety Today, its competitor, while

complying with Safeware’s obligations for discovery. See Layne

Christiansen Co. v. Purolite Co., 271 F.R.D, 240, 247 (D. Kan.

2010); see also Netquote, Inc. v. Byrd, No. 07-cv-630, 2007 WL

2438947, at *4 (D. Colo. Aug. 23, 2007) (finding attorneys’ eyes

only protections warranted where parties were in direct

competition). Consistent with the Court’s finding that good

cause exists for the discovery, it disagrees with Safeware’s

position that Safety Today’s request is merely a pretense for

engaging in sensitive or burdensome discovery. Consequently, the

Court will grant in part and deny in part the motion for a

protective order (Doc. #78) and grant the motion compel (Doc.

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#88). Finally, as per the parties’ agreed upon request, the

discovery cut-off is extended until September 1, 2013 and the

dispositive motion deadline is extended until October 1, 2013. 

IV. Conclusion

For the reasons set forth above, defendants’ motion to

consolidate this case with Safety Today, Inc. v. William Rankin,

No. 2:12-cv-929 is granted (Doc. #71). The Clerk of Courts is

directed to filed a copy of this order in Safety Today, Inc. v.

William Rankin, No. 2:12-cv-929 and to reassign that action to

the Honorable Michael H. Watson, with the undersigned continuing

to serve as the Magistrate Judge in both cases. The motion for

leave to file counterclaims is likewise granted (Doc. #82), and

defendants are permitted to file an amended answer consistent

with this Court’s order. The motion for a protective order is

granted in part and denied in part (Doc. #78) and the motion to

compel is granted (Doc. #88). Disclosure of the information

requested shall be limited to “attorneys’ eyes only.” Finally,

as per the parties’ agreed upon request, the discovery cut-off is

extended until September 1, 2013 and the dispositive motion

deadline is extended until October 1, 2013. The deadlines are

likewise extended to September 1, 2013 and October 1, 2013

respectively in Safety Today, Inc. v. William Rankin, No. 2:12-

cv-929, given that the cases are consolidated for discovery

purposes as well as for the purposes of motions practice. 

V. Procedure for Reconsideration

Any party may, within fourteen days after this Order is

filed, file and serve on the opposing party a motion for

reconsideration by a District Judge. 28 U.S.C. §636(b)(1)(A),

Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 91-3, pt.

I., F., 5. The motion must specifically designate the order or

part in question and the basis for any objection. Responses to

objections are due fourteen days after objections are filed and

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replies by the objecting party are due seven days thereafter. 

The District Judge, upon consideration of the motion, shall set

aside any part of this Order found to be clearly erroneous or

contrary to law.

This order is in full force and effect, notwithstanding the

filing of any objections, unless stayed by the Magistrate Judge

or District Judge. S.D. Ohio L.R. 72.4.

/s/ Terence P. Kemp 

 United States Magistrate Judge

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